With aims to increase the efficiency and ease of the government services to people, several projects were identified as the core of the e-government applications in Malaysia. E-filing is one of the projects that introduced by government agency called LHDN (Lembaga Hasil Dalam Negeri). Starting in 2006, citizens in Malaysia were able to choose among two tax-filing methods: manual and internet based or e-filing. Manual filing is the traditional method either by hand or typewriter. Taxpayers usually perform complex calculations using mental arithmetic or calculator, and then the return is delivered to the tax agency through the postal service or in person. Electronic tax-filing is a method that uses tax preparation mechanism provided by the agency; the forms can be directly transmitted to the tax agency through the internet. Calculation, error checking and suggestion for best return option for the taxpayer are carried out automatically. With the e-filing system, taxpayers and tax practitioners can file their income tax returns electronically via the enabling technologies, rather than through mail or physically visiting the tax offices. This may eventually make the art of tax filing and tax payment easier.
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Although adoption of e-filing may seem to benefit taxpayers, however, the number of taxpayers using e-filing system in Malaysia is consider far below among the world. According to the annual Global e-Government Study of Brown University in the United States, the following countries- Taiwan, Singapore, United States, Hong Kong and China are ranked as the top 5 countries in the world with most sophisticated e-Government websites among the 198 countries surveyed. In the Asia-Pacific region, Malaysia and Japan were the 2 countries with lowest number of users making transactions using government online with just 12% and 13% respectively. Singapore leads the region with 53% although Australia has seen the most significant increase in online government service usage from 31% to 46%. (The Star, Nov 12, 2002). Therefore, the importance of understanding and influencing citizens’ acceptance of electronic system is critical. The present study intends to understand the determinants of taxpayers’ adoption towards E-filing System. Understanding the determinants for adoption of e-filing will provide added leverage to enhance acceptance of e-Filing in the future. This study may help to develop an understanding on how to encourage Malaysian taxpayers to adopt e-filing in short period by examining on the social, cognitive and physiological components into user acceptance in play in predicting intention to use behavior when using e-Filing. The results from this study can be used by tax agency to either improve the system or utilize the information to find ways to attract more users to utilize e-filing.
Aim and Objectives of Research
The aim of this research is to investigate the perceptions of e-filing in Malaysia in order to improve the acceptability of e-filing.
What are the factors that affect taxpayers’ adoption towards E-filing in Malaysia?
To study the benefits of using E-filing system.
To identify the concerns among taxpayers in using E-filing system.
To determine the significant predictors on adoption of E-filing system.
To examine the relationship between cognitive instrumental and behavior intention of E-filing system.
To measure the extent to which the personal factors has an impact upon preference for E-filing system.
To find out how social factors influence the decision to use E-filing system.
To recommend Inland Revenue Board of Malaysia (IRBM) to improve the efficiency of E-filing system.
Over recent years, with the liberalization and globalization, fast delivery service is required a faster mechanism of transaction between government and its people. Internet has been used as a platform in almost all aspects of human living by government to provide services to citizens. Tax is one of the major priorities that had been identified by many officials in charge of introducing electronic government. Most of governments around the world have realized that electronic filing of tax, if properly used, is a way to improve efficiency in assessing and collecting tax information. It has the potential to improve tax-filing service while at the same time reducing costs to both taxpayers and tax collecting agencies. Since 2006, both Malaysian and non-Malaysian citizens has been given the opportunity to choose either manual or the internet-based to file their tax-returns. However, the number of taxpayers using e-filing system is far below the expectation. According to an empirical report in newspaper, the user of e-filing in Malaysia only reached 448,742 users from 6.4 million taxpayers in the country (Izatun, 22/4/08, The Star). The results have shown that many taxpayers did not use e-filing system to file their tax returns. According to feedbacks on Malaysia e-filing system that were captured by Star (2006), one of the major issues identified in that study was related to most of taxpayers were uncomfortable with e-Filing as they were unfamiliar with electronic transactions and some said they were not computer savvy. Even those who favored the convenience and ease of e-Filing were concern about the security and privacy of their personal data information furnished in the online e-filing system.
E-filing system is considered as an important application that automates tax can improve the efficiency in the operational and processing tasks involving tax-filing returns. It can improve the tax-filing service while at the same time save the costs of taxpayers and tax collection agencies. Firstly, E-filing system can avoid the problem of delay in collections of income tax and subsequently process the tax files expeditiously. In addition, given that the volume of taxpayers is increasingly risen up in the country, additional manpower and time are required to screen tax returns if the data has to be manually entered into the database. Thus it is guaranty that implementation of e-filing system would significantly streamline the process, improve the accuracy of the tax returns and reduce transcribing error that characterizes the manual base system. Apart of that, it is to better serve the interest of the taxpayers by overcoming their difficulties in using paper base system and to encourage voluntary compliance of the taxpayers in filing their tax returns. Thus implementation of e-filing system serves as alternative channel for taxpayers to reach the agency. In other words, implementation of e-filing system is expected to provide greater convenience for taxpayers by allowing them to file their tax returns at anytime and from anywhere within the stipulated tax filing period. Lastly, cost savings is another benefit of using e-filing system. According to Forrester Research (2001), savings has identified fall in the following three categories. First, automated data entry yields great savings. By using e-filing system, government clerks need not reenter tax information once entered by taxpayer and sent electronically to the relevant government database. As a result, the productivity of data entry and checking will increase and then reduce labor expenses for data handling personnel. Second, it would fewer the errors, lighten the verification and correction burden. Intelligent data entry and the elimination of data re-entry, combine to bring the error rate to 5 percent in countries like Ireland. Lastly, electronic data exchange would be reduces printing and mailing costs. Tax departments may spend considerable amount of money to subcontract printing and mailing of tax forms.
Although e-filing seems provide benefits to taxpayers, but the adoption of e-filing is still low in Malaysia. According to Bible Dictionary (1897), adoption is defined as an act to take and follow a course of action, for example by choice or assent. It also defined that adoption is an act of to vote to accept. User acceptance was defined by Swanson (1988) to be a ”potential user’s predisposition toward personally using a specific system.” According to Fishbein and Ajzen (1975), user adoption is determined by his behavioral intention. Behavior intention is a measure of the strength of one’s intention to perform a specified behavior. It is a kind of “self prediction” or “behavioral expectation”, indicated as one of the most accurate predictors available for an individual’s future behavior (Davis, 1989). According to researchers of consumer behavior, consumer intention is regarding repeated purchase (Patterson, 1997). Thus, the factors that affect taxpayers’ behavior towards e-filing have to examine in order to given rise to an increased comfort with website tax preparation and increase the number of taxpayers on using e-filing. This study will focus on several factors such as cognitive instrumental, personal factors and social influences on behavior intentions to use e-filing which consequently effect the adoption of e-filing system.
1.0 Cognitive Instrumental
1.1 Perceived ease of use
Perceived ease of use is defined as the degree to which a person believes that using a particular system would be free of effort. (Davis, 1989) Information systems that users perceive easier to use and less complex will increase the likelihood of its adoption and usage (Teo et al, 1999). An application perceived to be easier to use than another is more likely to be accepted by users. Past research provides evidence of the significant effect of perceived ease of use on usage intention either directly or indirectly through its effect on perceived usefulness. (Agarwal & Prasad, 1999). In order to encourage tax payers in Malaysia to use e-Filing, it is important to understand the factors that influence the intention to use e-Filing.
1.2 Perceived of usefulness
Perceived usefulness was defined by Davis (1989) as the degree to which the stakeholder perceives a particular system enhances job or performance. This follows from the definition of the word useful: “capable of being used advantageously.” Within an organizational context, people are generally reinforced for good performance by raises, promotions, bonuses, and other rewards (Pfeffer, 1982; Schein, 1980; Vroom, 1964). Besides that, perceived usefulness also is a prospective user’s subjective probability that using certain electronic application system will increase his or her performance within an organizational context (Davis et al. 1989). A system high in perceived usefulness, in turn, is one for which a user believes in the existence of a positive use-performance relationship.
1.3 Perceived Risk
According to the literature, risk perceptions have a significant impact on behaviour intentions (Fu et al., 2006). Perceived risk is defined as the citizen’s belief that he will incur a loss while pursuing a given outcome (Warkentin and Gefen, 2002). A common and widely recognized obstacle to electronic commerce adoption has been the lack of security and privacy over the internet (Bhimani, 1996; Cockburn & Wilson, 1996; Quein & Klein, 1996). According to Pavlou, 2003, perceived risk will reduces users’ intentions to exchange information and complete ecommerce transactions. Frambach (1993) found that the speed of adoption is negatively related to the level of perceived risk. The perceived risk surrounding and innovation might cause a potential adopter to postpone the decision to adopt or reject the innovation. Users of e-filing might influenced by risks they perceive, whether or not such risk actually exists. Thus, their perception of e-filing will affect their speed of adopting the system. Therefore, perceived risk was included as one of the determinants of taxpayers’ adoption of e-filing in the present study.
2.0 Personal factors
2.1 Personal innovativeness
The role of personal innovativeness in individuals’ adoption of innovations has been acknowledged in innovation diffusion studies (Rogers, 1995) wherein early users of an innovation are considered “innovative.” Other researchers have reported that global innovativeness exhibits low-predictive power when it comes to the adoption of any specific innovation (Goldsmith and Hofacker, 1991; Leonard-Barton and Deschamps, 1988). Citing these and some other related research findings, Agarwal and Prasad (1998) conceptualized the construct personal innovativeness, which they define as “the willingness of an individual to try out any new information technology.” According to Agarwal and Prasad (1998), they found that there is moderating effect of personal innovativeness on the relationship between behavior intentions. In the meantime, empirical support has been found for a direct effect of personal innovativeness on behavior intentions. (Thompson et al,2006; Yi et al., 2006). E-filing of income tax return is an IT-based innovation in the sphere of direct taxes administration. So, citizens who are more innovative in the IT domain will be more likely candidates to adopt e-filing system.
2.2 Computer Self-Efficacy
One of the most powerful theories of human behavior is the social cognitive theory. Social cognitive theory (Bandura, 1986) states that self efficacy as a direct determinant of individual’s behavior. Self-efficacy is an individual’s self-confidence in his or her ability to perform a behavior (Bandura, 1982). Computer self-efficacy is defined as the judgment of one’s ability to use a computer. According to Chan & Lu (2004), individual with high computer self-efficacy are expected to be able to competently use different software packages and computer systems while those with low self efficacy would perceive their capabilities as limited to particular software package or computer systems. Chau, P. Y. K. (2001) has confirm the critical role that computer self-efficacy plays in understanding individual responses to information technology. Based on the social cognitive theory developed by Bandura, (1986) postulated that computer self-efficacy affects an individual’s computer anxiety, which, in turn, influences the perceived ease of use, perceived usefulness, and consequently the system usage.
2.3 Facilitating conditions
Facilitating conditions representing the resources needed to engage in a behavior (Triandis, 1971). An environment with proper facilitating conditions will promote the exhibition of the appropriate behavior (Triandis, 1979). Taylor and Todd (1995) suggested that facilitating conditions be made up of 2 aspects, namely resource facilitating conditions and technological facilitating conditions. Fu, Fan and Chao (2006) elaborated that the absence of facilitating resources results in barrier to usage which may inhibit usage. Facilitating condition was found to have a direct relationship on infusion and adoption of a number of new information system innovations (Cheung & Chang, 2000; Jones, Sundaraman & Chin, 2002). Benbasat and Barki Quo Vadis TAM (1991) found that frequency of Internet use and previous completion of electronic transactions can have a positive impact on one’s intention to use an e-government transaction. Venkatesh, Morris, Davis (2003) found that facilitating conditions has a direct effect on actual system usage not behavioral intention. Thus, a taxpayer might be unwilling to accept e-filing if little or no computer equipment is available and if technical support is low.
3.0 Social Influence
3.1 Subjective norms
According to Fishbein and Azjen (1975) subjective norm refers to “a person’s perception that most people who are important to him/her think he/she should or should not perform the behavior in question”. The explanation to this is that under significant social influence and social pressure, an individual would perform a behavior even though the individual is not in favor of performing the behavior (Venkatesh & Davis, 2000). By the way, subjective norms were determined as perceived expectations of specific referent individuals or group, and his or her motivation to comply with these expectation or beliefs. Subjective norm has been found to be more important prior to, or in the early stages of innovative implementations when users have limited direct experience from which to develop attitudes (Hartwick & Barki, 1994). Previous researchers have found significant relationships between subjective norms and IT acceptance (Harrison et al., 1997). It is generally believed that government policy-making or government service delivery will be further helped by incorporating subjective norms (Cook, Kerr, & Moore, 2002; Lam, 1999).
In conclusion, the factors that will affect the adoption of taxpayers towards E-filing should be investigate deeply to provide important attributes for Inland Revenue Board of Malaysia (IRBM) to improve the efficiency of E-filing System.
Perceived Ease of Use
The research is designed in a cross-sectional survey to obtain information from respondents about their perceived ease of use, perceived usefulness, perceived risk, personal innovativeness, computer self efficacy, facilitating condition and subjective norms about electronic system to file their income tax returns and retention.
The approach for my research started with a comprehensive literature review with the aim to have a general idea and overview of e-filing system as well as adoption among taxpayers through different secondary data. The purpose of the literature review was to gather important information related to the topic and deepen the understanding of the E-filing System, the advantages and potential barriers in implement it in Malaysia.
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A survey of questionnaire will be chosen as the methodology for data gathering. Thereafter, a set of initial questionnaire will designed to achieve the objectives of the research. Before the questionnaire is finalized and send out to the potential respondents, a pilot study will be conducted. It also aims to ensure a presentable and quality questionnaire is produced. This involved testing the wording of the questions, validating the suitability of the questions, identifying ambiguous or negative statements and identifying the potential respondents. For this purpose, five initial questionnaires will be sent out to taxpayers for test. These taxpayers comprised of three educated taxpayers, and two low qualification taxpayers. All of them are from different level of income. For the remainder, all will be conducted face to face to the taxpayers mentioned. The respondents will be asked to answer the questions provided in the questionnaire before they give any comments and impressions on the questionnaire. After this pilot test, the appropriateness of the wording and the confused questions will be identified through the pilot study conducted. From the comments and responses given in the pilot study, problems can be identified and major amendments able to made. Comments obtained from the taxpayers are constructive to produce a quality and friendly questionnaire.
The choice of appropriate techniques for data collection greatly depends on the research approaches used. Questionnaire survey is the core research methodology used to achieve the objectives of this research. Questionnaire is probably the most widely used data collection techniques. Questionnaire survey is often used to find out facts, opinions and views on what is happening, who, where, how many or how much. Thus, this technique is feasible and suits to my research objectives as mentioned before. Personally administered questionnaire has been chosen as my form of questionnaires in order to ensure high response rate and clarify respondents’ doubts on the spot to avoid biased result. By this method, data can be collected by meeting the respondents personally, and any doubts that the respondents might have on any questions could be clarified on the spot. The required information able collected within short period of time. However, one of the limitations of questionnaire is that there is no opportunity for probing the details.
The questions are related to the research topic and the questionnaire will be designed to achieve the objectives of this research. The questionnaire consists of questions which related on the perceptual intention of the users to use e-filing system on the basis of the perceived ease of use, perceived usefulness, perceived risk, personal innovativeness, computer self efficacy, facilitating condition and subjective norms to know how these factors can affect the perceptual intentions of the users to use or do not use the system. This research embraces a lot of dimensions. The questionnaire will be started by characteristic factors such as gender, income and education level that can affect the perception of using e-filing system. After that, questionnaire will also include all the variable factors such as the concerns of easy to learn and easy to operate the system, whether the system enables to improve efficiency of tax filing, the security problems, the availability of the necessary resources and the users’ knowledge of e-filing system, and how social factors influence the intention to use e-filing system. All questionnaire items except demographic variables will be measured on 5-point Likert Scale, 1= strongly disagree, 2 = disagree, 3 = undecided, 4 = agree, and 5 = strongly agree.
Convenience sampling will be chosen as the sampling method for this research. This sampling method is drawn at the convenience of the researcher. However, error will be occurs in the form of members of the population who are infrequent or nonusers of that location. The unit of analysis for the research is every individual taxpayer that has involved in tax filing system and most of them have been used the e-filing system. Thus, the targeted respondents for this questionnaire survey are taxpayers around me as they are involve in the tax filing system. Therefore, this research will limit its scope to one geographical location in Klang Valley for data collection. A total number of two hundred (200) questionnaires were distributed to measure the respondents on different aspects to obtain my objectives for this research. In order that demographic may influences the adoption of e-filing system, thus different races, gender, age and also income level will take consideration in respondents’ selection.
After all the information is collected, the data will analysis according to the objectives of this research. The questionnaire collected from respondents will be analysis by using SPSS version 16 software. SPSS features a new clustering analysis technique, better reporting capabilities, improved data management and enhanced workflow. This software enable me to analysis the data easily and possesses a more powerful, less complicated syntax, enabling users to create more complex table structures and run reports in a production environment. Beside that it also can produce the deviation, variances, mean and medium of the data. Besides that, the Microsoft Excel Professional Window XP was used to present the data in the form of table, pie chart, bar chart and, etc. The method used in the analysis is average index and other statistic methods which are suitable in achieving the objectives of study. Results from the analysis is organized and arranged in a simple way so that they are easy to be read and understood.
Discussion of access and ethical considerations
Based on the methodology of this research, there are some potential ethical issues have to identify to avoid from produce sensitive and uncomfortable questions in questionnaire. First of all, anonymity of participant is one of the ethical issues that happened in questionnaire method. In the research process, if researcher asked for personal information such as age, income and phone number, the interviewees will feel uncomfortable and not willing to answer the particular questions. Thus, personal details will not be using at any point during the interview and report in my research.
Second ethical issue is confidentiality of participants. In research process, if the participants think that their information will spread out, they are not willing to answer the questionnaire. So, researcher has to ask what is needed for the report and does not included the question that participant does not want to included. Therefore, there are needed to mention that all information will be kept confidential and the information that they are provided just for this survey purpose.
The third ethical issue is informed consent. During research process, if participants are not really understand what purpose for them to answer questionnaire, they would worry and uncomfortable for it. So, it is important for all participants to know they are involved with the research. Thus, researcher has to prepare a cover sheet in questionnaire and require participants to sign when they are accepting to take part in the research.
The last ethical issue is personal safety. In research process, if researcher requires participants answer the questionnaire in particular place such as home, participants will feel scare and unsafe, then they would not willing to participate in research process. Thus, it is very important for the researcher to take place within a safe environment so no harm comes to participants. It is necessary for all survey process is conducted in a public place and therefore, there is no risk of personal safety other than normal circumstances.
There are some resources is needed in order to complete this research. For example, time and costs are spent in this research to gather information. The estimate time that required to completing this research is around 6 months, from February to May and September to December 2010. The estimate costs are around RM400 that is printing costs of 200 sheets questionnaire. In this research, in order that convenience sampling is my sampling method, thus no any transportation costs are incurred in this research.
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